Good afternoon, ladies and gentlemen. Thank you for joining Atlassian's Earnings Conference Call for the Third Quarter of Fiscal 2016. As reminder this conference call is being recorded and will be available for replay from the Investor Relations section of Atlassian's website following this call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] I will now hand the call over to Ian Lee, Atlassian's Head of Investor Relations. Please go ahead, sir.

Good afternoon and welcome to Atlassian's third quarter fiscal 2016 earnings conference call. On the call today we have Atlassian's Co-Founders and CEOs, Scott Farquhar and Mike Cannon Brookes, our Chief Financial Officer, Murray Demo and our President, Jay Simons. Scott and Michael will begin by recapping some of the highlights from the third quarter. Murray will then cover Atlassian's financial results for the third quarter and provide our financial targets for the fourth quarter and full year fiscal 2016. Following our prepared remarks we'll have a brief question-and-answer-session. Jay will also be joining for Q&A. The press release with our results for the third quarter was issued earlier today and is posted on our Investor Relations website at investors.atlassian.com. There's also an accompanying presentation and data sheet available on our IR website. Statements made on this call include forward looking statements. Forward looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward looking statements. You should not rely upon forward looking statements as predictions of future events. Forward looking statements represent our management's beliefs and assumptions only as of the date such statements are made. In addition during today's call we will discuss non-IFRS financial measures. These non-IFRS financial measures are in addition to and not as a substitute for us or superior to measures of financial performance prepared in accordance with IFRS. There are a number of limitations related to the use of these non-IFRS financial measures versus the nearest IFRS equivalents. For example, other company's may calculate non-IFRS financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-IFRS financial measures as tools for comparison. A reconciliation between IFRS and non-IFRS financial measures is available on our earnings release and in our updated Investor Data Sheet on the Investor Relations section of Atlassian's website. Further information of these and other factors that could affect the company's financial results is included in filings we make with the Securities and Exchange Commission from time-to-time. Including the section titled Risk Factors in the company's form F-1, previously filed with the SEC in connection with our IPO and form 6-K report that was filed on February 10, 2016. I will now turn the call over to Scott.

Good afternoon. We had another strong quarter as a public company. The third quarter of fiscal 2016 we achieved revenue growth of 40% year-on-year, non-IFRS operating margin of 15.5% and $40.7 million of free cash flow. This continued record of growth and positive free cash flow reflects the large markets we play in and the strength of our business model. Nonwage [ph] workers need to do three things, organize, discuss and complete work. With our products BitBucket, Confluence, HipChat, JIRA Software and JIRA Service Desk, we offer a unique portfolio that enables teams to address these three needs and our unique business model enables to target all teams, not just the Fortune 500 but the Fortune 500,000. This unique business model targets this immense audience via three core pillars, a focus on R&D innovation that flows from I believe is the best products win, a high velocity automated online distribution model and a transparent comnicolsa [ph]. These three pillars contribute to a business model that is more long term focused and predictable than most enterprise software companies. As reflected in our stock ticker teams record everything we do, solving complicated collaboration issues for our customer's teams but also by Atlassian serving as a role model for team best practices. We view our unique culture as a competitive advantage, and I'm proud to share two notable events that took place during the third quarter. First, the public released our initial diversity report, taking an unprecedented approach by releasing diversity numbers at the team level. The benefit of diversity is insuring the different backgrounds and ways of thinking of representative every decision that we make in every team in the company, and by reporting diversity at the team level rather than the traditionally reported corporate level data we provide a clearer picture and how well diversity spread throughout the company. We sincerely hope that other companies adopt this focus on team level representation. Second, this quarter Atlassian is recognized by the Great Place to Work Organization as the Best Place to Work in both the Netherlands and also across all of Asia. Having already been as number 2 in the United States for companies with less than a thousand employees and the number one place in Australia for companies of all sizes, Atlassian is now the best place to work across Asia Pacific, Europe and the United States. Mike and I have a long term focus on creating a workplace where great teams thrive, and this external recognition shows that we're well in our way. I will now hand the call over to Mike who will cover additional highlights from the third quarter.

Good afternoon, everyone. As Scott mentioned, we had a strong quarter of revenue growth and positive free cash flow. We also added more than 3,100 net new customers during the third quarter of fiscal 2016, bringing our total customer base to 57,431 in over 160 countries. We have now added more than 8,800 net new customers since the beginning of fiscal 2016 which commenced in July, 2015. As a reminder, our definition of a customer is an organization that has at least one active and paid license or subscription that which they paid more than $10 per month. Underlying the growth of our customer base are two important drivers. First, we have the ability to land within an organization through a variety of products and through any type of team, be it a technical development team or an IT or functional team within the business such as marketing, finance, HR or legal. We make it simple for customers to find, try and buy our products via our online distribution platform without the need to haggle up of pricing or complex documentation. Second, we expand from age initial land opportunity by offering additional products to existing teams. Building great products builds loyal customers. These are customers who not only love our products and want to buy more but who also want to share them with other teams inside of their organizations. With regard to landing in organizations, we continue to attract new customers across virtually every industry and business function and of all sizes. For instance in the third quarter of fiscal 2016, we added start up technology consulting firm Brillio, Chinese financial institution CITIC Bank and automotive company Nissan, Australia. In terms of breakdown by deployment, over half of our existing customers are cloud-based and over three-quarters of our new…

Thanks, Mike, and good afternoon. I'll cover Atlassian's fiscal Q3 2016 financial performance and our financial targets for the fourth quarter and full year fiscal 2016. Total revenue for the fiscal third quarter was $117.9 million, up 40% year-over-year. As we discussed last quarter, our revenue over the past few years has benefitted from some pricing optimizations to JIRA and Confluence that we initiated in calendar year 2012. Approximately nine of the 40 percentage points of the revenue growth in the third quarter of fiscal 2016 were attributable to these pricing optimizations. Turning to revenue by line item, I will provide a brief overview of each. First, subscription revenue primarily relates to fees earned from sales of our cloud products. A small portion of this revenue also relates to sales of our data center products which are several products sold to our largest enterprise customers on a subscription model. We recognize subscription revenue ratably over the term on the contract. For the quarter, subscription revenue was $38.7 million, up 71% year-over-year. The growth in subscription revenue reflects more of our customers choosing the cloud as well as strong growth in enterprise data center offerings during the quarter. Second, maintenance revenue represents fees earned from providing customer updates, upgrades and technical product support for our perpetual license products. Maintenance revenue is recognized ratably over the support period which is typically 12 months. For the quarter, maintenance revenue was $56.2 million, up 36% year-over-year. Maintenance revenue has been the primary beneficiary of the prior pricing optimizations to JIRA and Confluence. Third, license revenue is related to fees earned from the sale of perpetual licenses for our server or behind the firewall products and is recognized at the time of sale. For the third quarter of fiscal 2016 license revenue was $16.4 million,…

[Operator Instructions] And our first question will come from John DiFucci from Jefferies. Mr. DiFucci your line is open, are you on mute? Okay. We will move to the next person that is Sanjit Singh from Morgan Stanley.

Hi guys, thanks for taking my questions and congrats on a nice quarter. I wanted to get your take on the product portfolio and what parts of it seem to be seeing the most traction, whether it's chit chat, or service desk, any sort of color you could provide on where in part you see the most momentum?

Hi Sanjit, this is Mike. We have seen a very quarter along all the product lines. We don't again disclose individually by products for product lines. Growth numbers of individual figures but we had an excellent quarter across all products and product lines. At the same time you can see the subscription revenue up 71%. That the cloud and the data centers for our largest customers continues to also grow very strongly.

Great and Murray two small questions for you. On the tax side this quarter was there anything this quarter that caused tax a little higher than expected and in terms of the pricing I know you discussed 9 point impact this quarter. How should we think about that in Q4 and maybe early view into next year?

Yes, in terms of tax Sanjit, nothing particular to call out there, obviously we are a multinational company so we can have varying tax expense in different jurisdiction and so we in this quarter we have a little more than other quarters with our strong profitability so nothing to call out there. In terms of pricing, we had a great quarter there again, we had the 9 points related to the pricing optimization continuing to decline and we would have expected to decline again in the fourth quarter when we will share the results and the quarter ends up in our next call but we expect to continue to decline going forward.

And then my last follow up is I know you haven't discussed about fiscal year 2017 guidance but is there anything from the investment standpoint, is there anything that would cause pre cash flow margins to be down as far as your forecasting 2017?

We are not providing any specifics on 2017 at this point. we are going to do our entire strategic and operating plan process will ramp up here in a month and a half and we will be in a position to share more on our next earnings call and we will continue to invest in capital expenditures around our data centers and our facilities and overall in terms of hiring more employees given our large market opportunity but at this point we are not providing any specifics on free cash flow margin.

Fair enough, congrats again.

Thank you.

The next question will come from Brent Thill from UBS.

Good afternoon, I think you have been putting clear that cloud is economically indifferent to you. But also there is some new interesting scene opportunities that I would think open up as your customer's move to this architecture. Can you maybe just expand are you starting to see broader deployment that you maybe haven't seen before with the new architecture. It's just too early to make that call?

Thanks Brent, as we said before cloud opens up a whole bunch of opportunities for us particularly as we move down the software in the business users where they prefer our source of setting up of infrastructure to us and so that has opened up more opportunity and specifically at the low end with only companies with small teams. They get particular tractions of the cloud and they don't have to setup in the particular situation. So I see greater tractions in smaller accounts and as we know extend model and small accounts grow overtime.

Okay. And Murray on Q4 margin guiding the 10%. It was higher than last 2Q4 quarters and just so curious what would be deriving that below what you saw the last two Q4s?

Yes, two things, one is to continue to invest in our business which means head counts up, that will happen, we do have some plans around some additional marketing spends and other project expenses in the fourth quarter. we also, we have the lock up coming up for the release for employees and for those who have put in years of their personal investment in the company we are expecting they will some of their shares and there will be employer payroll taxes associated with that that we have factored into our operating expense targets so that's what is driving the higher OpEx and margin target of 10%.

And Murray sorry the lock up date for those employee shares is when?

May 9.

Okay. Thank you.

That's for the non-executives. The regular lock up is after market close on June 6.

Great thanks.

Our next question comes from Heather Bellini of Goldman Sachs.

Great thank you guys, I was wondering if you could share with us how you see the momentum building in geo service desk and how do you see the competitive landscape evolving here and I guess where you see the most success in used cases date.

Hey Heather, this is Jay. I will take the service desk question. Great momentum in the products and we see uptake in both the server base and the cloud and as Scott mentions part of what accelerates the cloud is the ease of setup both for IT to service the rest of the organization and in other business function like HR and finance, setup service desks provide service for the companies. So I think great momentum in terms of the competitive landscape, remember we are approaching the market a little bit differently. The service desks that are customers used your service desk to setup are deeply collaborative and so mostly inside of the business they are functional parts of the organization whether it's IT, HR, finance that are servicing other parts of the companies and often times we are displacing either there is something that is clunky or legacy or email and spreadsheets that people are flinging across the organizations to get help, so there is a tremendous amount of white space for that product for serving.

Okay great thank you for that and just on HipChat, the trends we are seeing around are attach and cross sell into the installed base. Obviously there was a product you guys acquired a couple of years ago. How do you see that attach and cross sell ramping?

Hey Heather, its Mike. HipChat had a really strong growth quarter. It's clearly a product that lands with all sorts of different teams much like service desk. It can land it inside business teams, inside software or inside IT teams. It does cross sell very well to all of our different product sets. It team might use HipChat and service desk together to provide service. Software team might use HipChat with Hit Bucket and Bamboo so it has a really great logical connection to all the other products that we have.

Great, thank you.

The next question comes from John DiFucci of Jefferies.

Thank you. I also have a product question and a two part question. Can Mike or Scott or Jay give any color on incremental traction of JIRA and Confluence outside the software development community and I guess follow up to the JIRA service desk question. Maybe you don't want to talk specifically because of competitive issues, but are there any other areas that you are working on right now, service desks couldn't mind came about because of demand or customers are using JIRA that way, but given that the core of JIRA is underneath the workflow, it seems like automating processes those are like applications potentially could become a lot of different things.

Thanks John, its Scott here. I could probably spend the next hour answering that question I think in terms of how we think about it is being strong in all collaboration across organization whether that's workflow management with JIRA, whether its content with Confluence or its communications with HipChat and we started with software teams as kind of clear as part of our organization. Often we had one or two or more small teams until we expanded out until our company stand out on Atlassian and we are seeing with building out a JIRA service desk or a JIRA core that those two parts have more specific LAN parts inside an organization where you might land service desk in an IT team or equally LAN service desk in HR team with service request from across organization. The JIRA is, what we have now is built for business teams and general workflow processes with JIRA core so it does have some of those cases you addressed in tandem generic workflow. And we do see companies take HR using service desk to handover requests with the rest of the organization and you use JIRA core to work to handle internal workflows inside the HR organization. So we do see what you describe happening across the customer base.

Scott could you roughly gauge of what percentage of portion of JIRA is part of your offerings overall, is it a quarter or just trying to gauge the opportunity.

We decided earlier, this is Jay by the way John, when we had the service desk opportunity we identified inside a customer base that 40% of your customers are already configured JIRA to support the service desk in this case and in some at last year survey prior to that customer base we identified that 30% of the customers that were using JIRA were using it within business teams business workflows and business projects.

Got it. And Jay you mentioned more engagement for cloud solutions and that's something we have seen at last for a while, I am just curious maybe Murray how should we think about CapEx going forward, we have a model but just wanted to make sure we model it appropriately. If you are seeing a greater option then perhaps we might have anticipated. Maybe we should increase or maybe not yet.

From the CapEx targets John, we have got our free cash flow targets for full year which obviously we are three-quarters of way through so you can see what it is for the fourth quarter. We will have some significant CapEx investments around the fourth quarter around data center and facilities and we would expect to continue to do that and in going forward in both of those areas, overtime the next investing on data centers or going to cloud providers, that trend probably moves towards cloud providers overtime but over the fourth quarter and beyond we are probably still looking at significant data center investments.

Okay. Thanks for it guys. Nice job.

Thank you.

And next we have a question from Bhavan Suri of William Blair.

Hey guys thanks for taking my question. Just focus on the service desk and just follow John's question little bit. When you go to market there, if I look at the guy like service now there is a huge partner channel to go and implement it, customize it and we are doing workflows, certainly the Sis whether the global Sis a lot of the smaller guys have an interest in changing the workflow and define workflow, is that a market strategy that's applicable here given the ease of use in configuration or do you think that that's something you may see in the future as opposed to being driver reach right now?

Hey Bhavan, this is Jay, absolutely as you know channels is and has been an important part of our data market model and so I think we need two things we need focus on simplicity and configurability on smaller customers or smaller teams inside large organizations to started really quickly, but we have also built a product in your service desk you know that is extremely configurable, where you can take really advanced workflows or business processes to help really large scale deployments and organizations, typically where the channel pivots to. So we have got our ready global channel, I don't even know in how many countries but kind of all over the world that are working with customers of all shapes and sizes to match your services on really complex workflows and service opportunity. So it has been and will remain a part of our go-to-market strategy.

Bhavan, this is Mike. Just to give you one more thing that I hope you guys have thought about. Extensibility has long been the hallmark of our products. You can see that in the marketplace. You get that in Service Desk with JIRA core workflow. But again for the SIs and the experts in our channel, that's obviously a big phase of how they can help connect to Service Desk into internal systems or whatever you needed to be to make it the most productive for your company.

Yes. So that all makes sense. I guess just one quick follow up and I got one for Murray. Typically the sale of your products has been incredibly frictionless, it's on the website, 98%, etcetera, etcetera -- with the SIs getting involved and sort of them saying, hey, let's make this more strategic and let's make this a bigger deal. Does that change the selling motion at all, or is that something that happens separately and then the selling motion is still very similar to what you have today? I guess what I'm asking is like if an SI comes into -- we got to a big global workflow review and we're going to implement your Service Desk, but we got to do all these pieces and your services is a component of a larger RFP.” Does that change the sales motion for you at all, or is it sort of separate and then you guys just do the partnership piece?

Bhavan, this is Jay. Not really. Keep in mind that we've had the channels an important part of the model for basically since the company was conceived. No real changes there. We can both start small either independently or a customer can just get started with sort of a team license and then bring in a channel partner to help in standardization mix, or expansion, or the channel can work on with the customer to open a wider initial opportunity or help the customer with a more complicated larger initial deployment – all those things work in our model.

Got it. It's incredibly helpful, guys, to help sort of understand how that model plays out continuously in the long term. And then one last one for Murray. Just R&D spend again, sort of another beat of the percentage of revenue based on I think where we were thinking, maybe other folks are thinking. Just how do we think of R&D spend moving forward? Obviously we like the fact that it's a high level, but how should we think about that moving forward, Murray? I know you're not going to guide but any color would be helpful.

Yes. We continue to invest in R&D. Obviously it's the life and blood of the company. It's critical to our future success. We will continue to invest in R&D. We did have a five-year model out there in terms of 30% to 33% for R&D. We haven't lost sight of that but for right now we continue to invest in our future and that means R&D.

Okay, great. Hey, guys, nice job. Thanks for taking my questions. Appreciate it.

And the next question comes from Michael Turits of Raymond James.

Hey, guys. Thanks for taking my question. Two sub question: first, can you comment a bit more on the competitive landscape around HipChat and how you're competing both with larger incumbent Microsoft, such as others as well as Slack and then also the other direction would be, how is the self-service model of expect the larger customers and getting uptake around premium support?

Sure. Hi, Michael, it's Mike, I can take that.

Hi, Mike. Thanks.

HipChat had a really strong quarter. There's probably a shift going on in how people collaborate inside organizations towards messaging and messaging-related applications and the connection of that to content, and workflow and other applications that you have. We're early in that space with HipChat and we think we're in a great position to take advantage of the opportunity ahead. In terms of how we actually take it to customers, again, it's the same model that we have in the other products. It's not any different in the way that it gets into a small team and then grows within the organization. The same frictionless automatic go-to-market model that we have applies as much in HipChat in messaging as it does in JIRA and project management. There's no difference in the model there.

I'm sorry. Mike. I'm just going to tackle on to the data center and enterprise products. We've seen great uptake. I think it was mentioned around a subscription line. A part of the contribution subscription line is data center which were server products that are sold to largest customers on a term basis subscription and we're just seen great growth there. Remember again, partly I think that's recognition of the success of the products we've had and our largest customers over time as companies continue to scale the tens of thousands of users and begin to standardize a broad range of the lasting products, look to data center to support the really high availability end scale. And then also I think it's a testament to the success of the channel for the earlier question because they're working alongside us with some of the largest customers to help with that standardization scale process.

I guess my question was really separate between HipChat versus the Go-to-market. My question just to clarify was really as you are going up market and working more with larger customers, does the self-service model continue to be as successful? Are there any push for more dedicated resources and is that being flooded especially by the premium support offering in the technical account managers?

Sure. This is Mike again, Michael. I would say we've been in the high end of this customer base as you described for a long time now. This is not a new shift for us that we're suddenly getting into this segment of customers. We continue to improve how we get in. Again, you've seen with the enterprise program over the last three years data center offerings, premium support, technical account management programs that we have, those have all come thru talking to our largest customers about how we can service their needs better and how we can generally make them happier. It's important to know in terms of -- it often comes up with sales activity that that is in itself, those things tend to be an upgrade to an existing sale. It's an existing customer that we have that's asking for more services in a higher level of engagement for them as they standardize across the large company. It's not the same as going in to a large company with very large sale to start with.

All right, guys. Thanks very much.

And our next question comes from Steve Ashley of Robert W Baird.

Terrific. I was going to ask about JIRA core, how the early adaption, response has been to that and how you may be trying to go to market and drive awareness of that outside the developer community?

I'll take that, Steve. Hey. It's as we mentioned a little bit earlier, part of we identified within the JIRA base is just pretty wide adaption where people have taken JIRA, configured it for business team used case. So we saw with the JIRA 7 release, the JIRA software and JIRA core is dedicated products that could support those types of needs where in JIRA software, we could go a lot deeper in just software teams and spend capabilities that are really going to be either irrelevant or confusing to people outside of the software development process. In JIRA core, what we did was sort of a purpose-build, dedicated product around the type of project management, project workflows as the business teams engage in. I think two things: A, we don't break it up. We've been super excited about the growth and the uptake that we've seen in that particular product and maybe no surprise because we already had kind of a captive customer base that had been stretching JIRA into those used cases anyway; and then I think just finally in terms of the market question, I think our model is the way to sort of reduce a lot of friction for business teams that want to go quickly into the type of product, workflow and project management that JIRA core can provide. Then keep in mind that what we do around helping teams track work, create and share content, communicate is universal and so, Confluence and HipChat is a really important complement to JIRA Service Desk and JIRA core, really provide that four-legged stool of helping really up-level the productivity communication that teams are looking for.

Perfect. Thank you.

[Operator instructions]. Our next question will come from Patrick Wall Ravens of JMP Securities.

Hi, guys. This is actually Matt on for Pat. Thank you very much for taking my question. I guess I'll just ask a little bit more about various geographies or verticals. Are any of that were particularly strong for you guys in the quarter? And I guess unlikely, but were there any that might have underperformed expectations a little bit? Thanks.

Yes, Matt. We provide some information, obviously there are some geographic revenue information that's in our data sheet. It's on our investor relations website. But nothing stood out this quarter that was any different from the trends that we've seen in the past. Both in terms of geographies, verticals.

Great. Thanks a lot and congrats on a great quarter.

Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to the company for any closing remarks.

Scott here. I want to say I thank everyone for joining our call and we appreciate your time and we look forward to keeping you updated on our progress. Thanks a lot.

Thanks, guys.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.